The proportion of residential aged care homes operating at a loss has slightly decreased compared to last year, however this still equates to more than half of homes, StewartBrown’s latest report shows.

Benchmarking firm StewartBrown’s Aged Care Financial Performance Survey for the nine months ending 31 March 2021 shows that 54 per cent of homes recorded a loss, down from 58 per cent in March 2020.

Without the COVID-19 subsidy, 60 per cent of aged care homes would be operating at a loss, the survey shows.

The survey of 1,174 aged care homes also shows that 28 per cent of homes recorded a cash loss with the COVID-19 subsidy, down from 31 per cent 12 months ago.

StewartBrown senior partner Grant Corderoy said these slight improvements are due to the COVID-19 subsidy aged care providers received.

“It’s not surprising and it demonstrates that the financial performance of the residential aged care sector needs funding initiatives to be able to support it,” Mr Corderoy told Australian Ageing Agenda.

Grant Corderoy

“It’s a continuation of the struggling financial performance of the residential aged care sector,” he said.

While the financial performance of aged care homes in all locations had some improvement, inner regional homes fared the worst, with 56 per cent of these homes operating at a loss, down from 62 per cent the previous year.

In major cities, 53 per cent of homes are operating at a loss, also slightly down from 55 per cent in March 2020.

Image: StewartBrown.

However,  regional and remote homes had a “major improvement” in performance, with 52 per cent of homes operating at a loss, down from 69 per cent in March 2020, the report said.

“The regional and remote homes had the effect of the ongoing 30 per cent viability supplement in combination with the COVID subsidy, which has certainly increased their performance,” Mr Corderoy said.

Occupancy decline continues

The report shows 90.8 per cent occupancy across all homes, down from 92.1 per cent in March 2020.

Occupancy in  mature homes at  full operating capacity  fell to 92.5 per cent from 94.1 per cent the previous year.

South Australia recorded the highest average occupancy (96.1 per cent), followed by Western Australia (94.7 per cent), the ACT (93.6 per cent) and Tasmania (93.3 per cent).

Image: StewartBrown.

Mr Corderoy said occupancy in the eastern states was of particular concern, with Victoria faring the worst (90.5 per cent) followed by New South Wales (91.5 per cent) and Queensland (92.5 per cent).

While the COVID-19 pandemic has affected occupancy, the preference for home aged care has been a stronger influence, Mr Corderoy said.

“The impact on occupancy is particularly in relation to the increased home care packages, which means that residents or potential residents are now staying in their homes longer, which is a positive thing… but that has had the resultant effect on the occupancy,” he said.

As reported by Community Care Review, StewartBrown found that in-home care was moving to a more financially sustainable level, but underlying issues needed to be addressed to contain the exponential growth in unspent funds.

Improving aged care’s financial performance

To improve the financial viability of the aged care sector, the $10 Basic Daily Fee should to be deregulated and the accommodation pricing model revised, Mr Corderoy said.

“We need to look at the accommodation pricing again to see the if the Refundable Accommodation Deposits are advantageous and equitable for consumers, as well as providers and whether you pay a RAD or a Daily Accommodation Payment,” he said.

These areas need to be addressed urgently, Mr Corderoy said.

“If we address those two, I think that we would certainly understand exactly what’s required then to improve the investment and the viability of the sector.”

Other findings

  • 3.27 total care hours per resident per day on average, up from 3.23 hours the previous year
  • everyday living services exceeded revenue by $8.85 per bed day on average, up from $8.82 the previous year
  •  $6.10 loss per bed per day on average, down from $8.23 loss the previous year.

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